Dive Brief:
- Veritiv, based in Atlanta, announced an agreement to acquire Australia-based Orora’s North American business, Orora Packaging Solutions.
- The deal is expected to be worth $1.2 billion and close in the fourth quarter this year, according to an Orora news release.
- During Orora’s investor day presentation earlier this year, it noted that OPS charted $3.3 billion in annual revenue — 65% of which was for custom solutions — and had 3,500 employees across 66 locations in the U.S. and Mexico.
Dive Insight:
In November, private equity company Clayton, Dubilier & Rice completed its acquisition of Veritiv in a $2.3 billion deal that took the packaging company private. Prior to that, Veritiv stock had been traded on the New York Stock Exchange since 2014, when the company was created via the combination of International Paper spinoff xpedx and Unisource Worldwide.
In April, Veritiv acquired Texas-based Ameripac. In February, it acquired Vivabox Solutions.
Veritiv’s final earnings statement as a publicly held company, covering the period ending Sept. 30, 2023, put its quarterly net sales at $1.46 billion, down 19% year over year; it reported $4.43 billion in net sales for the nine-month period ending Sept. 30, 2023, also down 19% year over year.
OPS already largely operates as a standalone business, and divesting it will transition Orora into a dedicated beverage packaging business, according to a news release. The transaction will enhance Veritiv’s specialty packaging distribution capabilities, the company said.
In its full-year fiscal 2024 earnings release last month, Orora disclosed that it was performing a strategic review of OPS. During the investor day presentation in spring, Orora had said OPS was well positioned for profitable growth while “navigating subdued customer demand, proactively managing cost and driving operating efficiencies.”
In December 2023, Orora completed the acquisition of France-based Saverglass from The Carlyle Group for about $1.4 billion. Last month, Orora rejected a $2.25 billion purchase offer from U.S.-based Lone Star Fund to purchase the entire company, because it believed the offer was too low.
Both OPS and Veritiv say the businesses will mesh well, as they have numerous areas of overlap.
"Our complementary business strategies and core values make this partnership a natural fit, and I am confident the integration will create a stronger, more agile organization that sets new standards for excellence,” said Veritiv CEO Sal Abbate in a news release. "By uniting two successful players with a shared commitment to innovation, sustainability, and exceptional customer experiences, we are poised to offer a wide range of products and value-added solutions that meet even the most complex packaging and supply chain needs.”
They each market their commitments to sustainability, which they’ll retain going forward.
“Both companies have a customer-centric approach, which will be underpinned by a combined broad-based footprint, enhanced design and value-added services, and a laser focus on sustainability,” said Kelly Barlow, president of OPS, in a news release.
With the proceeds from the sale, Orora plans to invest in production of beverage packaging and on paying down debt.
